Annuities Get No Respect: New Study Confronts Misconception

INSIGHTS | 06.12.19
by: Adolph Pajkos, Eagle Life Insurance Company and Kenneth Kehrer, Kehrer Bielan and Consulting

Fixed-rate and index annuities provided the lion’s share of revenue as banks and credit unions launched their investment services offerings in the 1980s and 1990s, yet as the bank insurance and securities community has matured, annuities get no respect. They are looked down upon as an investment product on training wheels, an inefficient way to save for retirement, and a one-and-done transaction product. Financial institutions want to switch to advisory products, which provide ongoing fee income and are thought to create deeper relationships with clients.

But a new study throws cold water on that presumption. Kehrer Bielan has demonstrated in a series of studies that developing an investment relationship with a bank customer or credit union member increases the client’s loyalty to the institution. Digging deeper into those findings, we see that selling a fixed-rate or index annuity to a client increases their loyalty to the institution more than selling them an advisory product.  Read the rest of the article…